As a growing percentage of Amazon’s business comes from third-party sellers and subscriptions like Prime, investors should prioritize gross profit over year-over-year revenue growth, according to Evercore ISI.

Analyst Anthony DiClemente’s said his new, “more nuanced” gross profit model and expectations for significant profit growth buoy his 12-month price target on the e-commerce giant to $1,965 from $1,800. Evercore ISI has an outperform rating on Amazon.

The analyst sees Amazon’s 2020 earnings per share rising to $44.30, up from 2018’s $20.10. The company stock rose 0.8 percent before the opening bell Monday. The stock closed Friday at $1,671.73.

“Given Amazon’s shifting business mix, the pace of gross profit growth has become a more relevant indicator of the health of the business, and as such, should be the key metric used to value the company,” DiClemente wrote. “As such, we remain bullish on Amazon at least in part because the company’s gross profit is expected to grow about 400 basis points faster than revenue for Amazon over the next three years.”

That may signal a welcome change for some Amazon investors, who for a long time have looked to Amazon’s revenue growth as the most important number for the Seattle retailer.

While its sales were double what they were three years ago at the end of the fourth quarter, growth has slowed for three straight quarters and kept pressure on shares. Though Amazon sales climbed 19.7 percent in the latest quarter, faster than expected, it was still the slowest since the first quarter of 2015. The stock slid more than 5 percent in response.

Investors may have also been disappointed with Amazon’s first-quarter guidance, which forecast revenue between $56 billion and $60 billion. That is slightly below the $60.8 billion consensus estimated by FactSet

Valuing companies by their profit — or profit growth — is nothing new. Investors often cut big technology companies slack on the bottom line for years so long as the company is one day expected to capitalize on heavy spending and cash burn.

Netflix, for example, said its famous cash burn will peak in 2019 and dwindle off in coming years after significant investments in original content. The company has long argued its cash burn is a long-term investment because it ultimately owns the rights to the original content produced, which in turn drives membership and revenue growth.

“The engine of growth for Amazon e-commerce is the third-party marketplace (greater than 50 percent of units), where Amazon collects high gross margin fee revenue,” the analyst added. On a sum-of-the-parts basis, DiClemente believes e-commerce business is worth $230 per share, the third-party business is worth $490 per share and its advertising business worth about $150 per share. Amazon Web Services is worth $990 per share, he added.

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